Consumer Federation of America and Public Citizen v. U.S. Dept. of Health & Human Services

• Decision Date: 21 May 1996
• Docket Number: No. 95-5384,95-5384
• Citation: 83 F.3d 1497
• Parties: , Medicare & Medicaid Guide P 44,203 CONSUMER FEDERATION OF AMERICA AND PUBLIC CITIZEN, Appellees, v. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1497

83 F.3d 1497

317 U.S.App.D.C. 449, Medicare & Medicaid Guide P 44,203

CONSUMER FEDERATION OF AMERICA AND PUBLIC CITIZEN, Appellees, v. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Appellant.

No. 95-5384.

United States Court of Appeals District of Columbia Circuit.

Argued March 29, 1996.

Decided May 21, 1996.

Appeal from the United States District Court for the District of Columbia (No. 93cv00097).

John S. Koppel, Attorney, United States Department of Justice, argued the cause for appellant, with whom Frank W. Hunger, Assistant Attorney General, Michael J. Singer, Assistant Director, and Eric H. Holder, Jr., Washington, DC, United States Attorney, were on the briefs.

Allison M. Zieve argued the cause for appellees, with whom Brian Wolfman, Washington, DC, was on the brief.

Before: WALD, SILBERMAN, and SENTELLE, Circuit Judges.

Opinion for the court filed by Circuit Judge WALD.

WALD, Circuit Judge:

In 1992, the United States Department of Health and Human Services ("HHS" or "agency") issued regulations implementing the 1988 Clinical Laboratory Improvement Amendments ("CLIA" or "Act"), which expands and strengthens federal regulation of laboratories that perform clinical tests on specimens from the human body. The specific regulations at issue here pertain to two key components of CLIA: first, a regime for classifying laboratory tests and developing uniform national personnel standards applicable to each of these test categories, and second, a proficiency testing program designed to ensure adequate performance by cytologists ¹ working in clinical labs. Consumer Federation and Public Citizen, two national organizations concerned with consumer and health advocacy, challenged the HHS regulations as contrary to the dictates of CLIA. Ruling on cross-motions for summary judgment, the district court invalidated both elements of the CLIA regulatory scheme and ordered HHS to engage in expedited rulemaking on remand.

HHS now appeals the district court's ruling, seeking reinstatement of its regulations, or in the alternative, an order vacating the district court's instructions to expedite new rulemaking. Because we agree with the agency that its regulations regarding personnel qualifications represent a permissible construction of the relevant CLIA provisions, we reverse the district court's invalidation of the personnel regulations. As to the regulations covering cytology proficiency testing, we find that while the agency's belated explanation for its actions in a declaration submitted by an agency official to the district court might have passed muster if timely proffered, that declaration constitutes post hoc reasoning not included in the agency record. Since review of an agency action must be based on the administrative record alone, we do not consider this supplementary information and accordingly remand the proficiency testing regulations to the agency to develop an adequate explanation on remand, if it can do so.

I. BACKGROUND

In response to growing public concern about the quality of clinical laboratory testing, Congress passed CLIA in 1988 to ensure competence among laboratories testing human specimens for disease diagnosis, prevention, monitoring, and treatment. Prior to CLIA, the federal government regulated only those laboratories which received reimbursement from the federal Medicare program or handled test samples shipped in interstate commerce. H.R.REP. NO. 899 at 11, reprinted in U.S.S.C.A.N. at 3831; S.REP. NO. 561, 100th Cong., 2d Sess. 3-4 (1988) [hereinafter S.REP. NO. 561]. All other labs performing clinical tests were free from federal regulation and oversight. Following extensive hearings and investigations, Congress concluded that some of these unregulated facilities "pose[d] a serious threat to the public health." H.R.REP. NO. 899 at 14, reprinted in U.S.S.C.A.N. at 3835. Because they processed tests without sufficient regard for accuracy or reliability, these labs reported incorrect test results at an unacceptably high rate. Id.; S.REP. NO. 561 at 4-5; 27. In particular, significant attention was focused on laboratories reviewing Pap smears, which are used to screen women for indications of cervical cancer. Witnesses presented evidence that many labs were employing inadequately trained cytologists and requiring them to process tests at rates two to three times higher than the recommended maximum workload. S.REP. NO. 561 at 5. As a consequence, the labs reported large numbers of false negative results, contributing to unnecessary suffering and even death in women who did not receive prompt treatment for cervical cancer because the labs failed to identify their Pap smears as abnormal. H.R.REP. NO. 899 at 16-17, reprinted in U.S.S.C.A.N. at 3837-38; S.REP. NO. 561 at 27.

Congress identified a number of reasons for these deficiencies, including the absence of uniform standards for personnel performing clinical tests, rates for screening cytology specimens which were so rapid that the risk of improper diagnosis was extremely high, ineffective proficiency testing (or none at all), and the lack of proper quality control measures. H.R.REP. NO. 899 at 12-17, reprinted in U.S.S.C.A.N. at 3833-38; S.REP. NO. 561 at 4-5. To remedy these critical shortcomings, Congress expanded HHS's oversight responsibilities to include all laboratories performing clinical tests on human specimens and revamped the existing regulatory scheme. Two of these reforms are at issue here: a system of personnel qualifications, and proficiency testing requirements for cytologists.

CLIA directs HHS to establish personnel qualifications for all individuals performing clinical tests, and further instructs that the qualifications "shall, as appropriate, be different on the basis of ... the risks and consequences of erroneous results associated with such examinations and procedures." 42 U.S.C. § 263a(f)(1)(C) (1994). As explained in greater detail below, HHS divided all clinical tests into three categories, and assigned increasingly stringent personnel qualifications to each category. Although it had initially classified the tests according to, inter alia, the consequences of an erroneous test result, it dropped this factor from the classification scheme in its final rule. Instead, the agency categorized tests on the basis of several other factors, the most prominent of which was the complexity of the testing procedure, and imposed increasingly demanding personnel standards for each successively complicated category.

CLIA also requires periodic proficiency testing of cytologists, to be conducted "to the extent practicable, under normal working conditions." Id. § 263a(f)(4)(B)(iv). Despite this language, the testing protocol selected by HHS used a work rate significantly lower than the maximum permissible daily work rate. While a cytologist could screen up to 100 slides per day at work (a work rate of 12.5 slides per hour), the regulation indicated that testing should take place at a rate of 5 slides per hour, and also stipulated that a proficiency test include a much higher proportion of abnormal slides than would occur in the average work day (30% to 60% abnormal slides, as compared with a workday average of 5% abnormal slides). 42 C.F.R. §§ 493.855, 493.945 (1995).

Consumer Federation of America ("Consumer Federation") and Public Citizen ² challenged both parts of the CLIA regulations as arbitrary, capricious, and in violation of law. On cross-motions for summary judgment, the district court ruled for the plaintiffs, finding that neither regulation comported with the relevant statutory requirements. Although it permitted the challenged regulations to remain in place pending issuance of a new rule, the district court ordered HHS to promulgate new proposed regulations within 90 days, and a final rule "within a reasonable time thereafter." Consumer Fed'n of America v. Dep't of Health and Human Services, 906 F.Supp. 657, 668 (D.D.C.1995). HHS then requested a partial stay of the portion of the district court's order requiring the agency to expedite issuance of a new proposed rule regarding personnel qualifications. Although the district court denied the motion, it was granted by this court on December 1, 1995. HHS now appeals the district court's ruling as to its regulations on both personnel qualifications and cytology proficiency testing, arguing that the challenged regulations are in accordance with the relevant provisions of CLIA. In the alternative the agency seeks reversal of the district court's order to engage in expedited rulemaking.

II. ANALYSIS

We now turn to each set of regulations successfully challenged by Consumer Federation in the district court. We review de novo the district court's order granting Consumer Federation's motion for summary judgment and denying the government's cross-motion for summary judgment. Center for Auto Safety v. Federal Highway Admin., 956 F.2d 309, 312 (D.C.Cir.1992). Summary judgment is appropriate only when the record reveals no genuine issue of material fact. See FED.R.CIV.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Because the contested regulations involve two different provisions of CLIA, we treat them separately, considering the relevant statutory language, regulatory background, and procedural history of each one.

A. Personnel Qualifications

The section of CLIA directing HHS to develop national personnel standards requires that medical labs

use only personnel meeting such qualifications as the Secretary may establish ... which qualifications shall, as appropriate, be different on the basis of the type of examinations and procedures being performed by the laboratory and the risks and consequences of erroneous results associated with such examinations and procedures.

42 U.S.C. § 263a(f)(1)(C). In its May, 1990 Notice of Proposed Rulemaking ("NPRM") implementing this provision, HHS proposed a...